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Michael Shah Discusses the Impact of COVID-19 on the Hospitality Industry
As one of the first industries to experience the impacts of COVID-19, the hospitality landscape may experience long-term implications, once the pandemic over. The decision to temporarily shut down hotels, restaurants, theme parks and flights have had a significant impact on worldwide tourism. As hotels employ roughly 4% of the total United States workforce and contribute approximately $660 billion annually to GDP, there is growing concern around the survival and recovery of this fundamental industry. As the Managing Partner of Delshah Capital, Michael Shah believes that with the right strategy and government assistance, the hospitality sector may come out stronger than before. Michael Shah takes the time to assess how the pandemic has impacted the economy to-date and outlines various strategies on how to rebuild.
Loss of Revenue and Decrease in Tourism
With millions of individuals out of work and lost hours due to limited travel as a result of COVID-19, the economic impact has been significant, and the effects immediate. Worldwide, Michael Shah explains that the hospitality industry is expecting a loss of $2.1 trillion in revenue. Additionally, the World Travel and Tourism Council estimates that around 75 million hospitality jobs will be lost to the pandemic. Many hotels have found themselves empty and taking various measures in an attempt to fill rooms. Not only has this impacted overall revenue, but it has hit hotel workers the hardest.
With approximately 8.3 million people employed by the hotel industry, roughly 85% of these workers are paid hourly. Considering that most employees receive an hourly wage rate of $13 on a 36-hour week, hotels have lost roughly 2.3 billion of income per week since the start of the pandemic. Many unsalaried workers do not have paid leave to fall back on, nor emergency savings. Michael Shah explains that the human impact is the biggest concern for the hospitality industry, and the subsequent impact it will have on the American economy.
Steps the Hospitality Industry Can Take
The current reality is that few tourists are taking holidays, and as a result, many accommodations are running empty, and hotel personnel are being asked to cut work hours. The hope is that domestic tourism will be able to partly offset the expected dives in international visitors. Michael Shah explains that hotels will have to win visitors back, and can utilize two key strategies to do so: help guests feel safe, and provide customers with flexibility. Hotels must try to combat fears surrounding COVID-19 by conducting temperature screenings, cleaning regularly, ensuring guests complete a travel and health declaration, and providing them with surgical masks and sanitizers on arrival. Hotels can also provide scheduling flexibility to help boost revenues and bookings. Now is not the time to go after customers for extra cash through penalties and fines. These same effects are felt in the restaurant industry as well.
The Bottom Line
After facing mass-scale cancellations for travel bookings and hotel accommodations, it is uncertain when things will go back to normal. Michael Shah explains that some people working in the industry do not see the sector being revived until some time in 2021.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes